Note published in El Economista, Empresas [Companies] Section by María del Pilar Martínez.
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Note published in Factor Capital Humano, Destacado [Highlights] section by Pilar Martínez.
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The head of the Department of Labor ruled out the possibility that the regulation on labor subcontracting will be postponed for the new legislature in the month of September.
Luisa María Alcalde Luján, Minister of the Department of Labor and Social Welfare (STPS), stated that an agreement will be reached within coming days in regard to the bill for regulating subcontracting that will allow congressmen, as the house of origin, to continue with the legislative procedure for a possible approval. It is not, she said, about sending a new bill but rather, if applicable, of making modifications.
In this manner, Alcalde Luján maintained that the discussion will not be left until the month of September, but rather that “we hope that this can happen within the next few weeks and that Congress, in this case the House of Representatives, as the house of origin, can discuss it and we hope that, as applicable, can approve it so that it is passed to the House of Senators and have the bill approved within the next few weeks or within a couple of months.”
In this regard, congresswoman Anita Sánchez, secretary of the Commission on Labor and Social Welfare of the Lower House, stated that the bill “is not dead, we are waiting for adjustments which could arrive in the last weeks of February. We are ready for its discussion”, she said.
The proposal by the executive Power to reform the Federal Labor Law in regard to subcontracting matters was presented on November 12, 2020 and, in its declaration of purpose it seeks, among other actions, to prohibit the use of subcontracting – insourcing and outsourcing – to avoid the simulation of hiring and the violation or the workers’ rights.
“We have made progress (in the discussion) on profit sharing, public forums were opened because there is concern within the business sector that, should the bill be approved, there could be distortions in some sectors at the moment of complying with the payment of profit sharing.
This has been analyzed and we are close to reaching an agreement, the idea is not presenting a new initiative but, rather, that there should be modifications if applicable.”
In a press conference offered in the state of Baja California, one of the entities that transits the new model of labor justice, Alcalde Luján stated that “there have been assumptions that this issue will be discussed after the election and that is not the case; at least, it is not the intention of the government of Mexico, President López Obrador presented a bill at the end of last year that brings order to the matter of subcontracting ”.
Last February 3, Morena senator Ricardo Monreal had stated that it was not probable that some controversial bills in the current legislature, such as the regulation of subcontracting and the restructuring of the autonomous regulating bodies would be discussed before the mid-term elections to be held in mid-July of this year.
The hidden loss for the government
According to the analysis that has been presented in discussion forums, the negative effects of eliminating subcontracting also include insourcing – a different corporate name within the same group of economic interest, that is in charge of the administration of personnel – because it could represent a loss of revenue for the federal government of approximately 14,000 million pesos.
This is because, if one considers that out of the total number of insourcing workers, only 60% of employers would hire their personnel directly – some of them only on a per fee basis – leaving 40% of them without a formal job, and taking into account that their estimations on internal subcontracting matters involve 4.6 million workers, who would cease to be covered by social security as well as Income Tax (ISR); this would not only affect workers because tax collection would also be affected; for this reason, this mode is still under discussion.
It should be noted that, in both houses of the Legislative Power, there are 22 bills that have been presented, but the one sent by the Executive Power on November 12 is the one facing the greatest changes.
Héctor de la Cruz, labor specialist at D&M Abogados, said that, while the pact signed between employers, the federal government and workers did not have the objective of modifying the original bill “it only opened a time gap for companies to regularize their subcontracting operations and, in parallel, for the proposals on profit sharing to be discussed.”
In terms of profit sharing, it is possible that there may be modifications for certain industrial sectors: “particularly for those in which the impact of this cost may cause distortions, although, during public dialogues on the topic, the authority was clear in the sense that the right of the workers to receive profit sharing is untouchable”, but we will see what happens in the next few weeks.